Cassidy v. Kraft-Phenix Cheese Corp.

• Decision Date: 30 June 1938
• Docket Number: No. 68.,68.
• Citation: 280 N.W. 814,285 Mich. 426
• Parties: CASSIDY v. KRAFT-PHENIX CHEESE CORPORATION.
• Court: Michigan Supreme Court

285 Mich. 426

280 N.W. 814

CASSIDY

v.KRAFT-PHENIX CHEESE CORPORATION.

No. 68.

Supreme Court of Michigan.

June 30, 1938.

Action by Charles F. Cassidy against the Kraft-Phenix Cheese Corporation. Plaintiff's amended declaration was dismissed in part, and plaintiff appeals, and defendant cross-appeals.

Reversed and remanded, with directions.Appeal from Circuit Court, Wayne County; James E. Chenot, judge.

Argued before the Entire Bench, except McALLISTER, J.

Rich & Willis, of Detroit (Marvin M. Peck, of Detroit, of counsel), for appellant and cross-appellee.

Bodman, Longley, Bogle, Middleton & Farley, of Detroit, for appellee and cross-appellant.

NORTH, Justice.

Leave having been granted, plaintiff has appealed from an order of the circuit judge dismissing plaintiff's amended declaration in part. Defendant has taken a cross-appeal, claiming that the court should have dismissed the declaration in toto.

The declaration contains three counts. The circuit judge dismissed the first count and paragraph four of the third count. The first count is for breach of an alleged oral agreement entered into on the 13th day of November, 1935, in the city of New York. It is alleged that the defendant, a Delaware corporation, orally agreed to grant to plaintiff the exclusive manufacturing and selling rights for certain territory in the State of California of a product known as O-Ke-Doke. The contract period was for six months ‘after commencement of business,’ and for an additional period of six months at plaintiff's option, provided he purchased from the defendant a minimum of 5,000 pounds of cheese per month. Defendant has a trademark on the name ‘O-Ke-Doke’ and also patents covering the manufacturing process and equipment necessary to produce this product, which is made by applying to popcorn a coating having a cheese flavor. Plaintiff alleges that in accordance with the terms of the oral agreement he prepared to manufacture and sell this product in the specified territory, and to accomplish this purpose he agreed to purchase from defendant certain materials required in the process of manufacturing the product, and he was to establish a manufacturing plant in the city of Los Angeles, perfect sales agencies and in general promote the sale of O-Ke-Doke in the designated territory. Plaintiff alleges that with the knowledge and consent of defendant he expended substantial sums of money in working out the preliminary details, which included expenditure of time, traveling expenses, investigations of the possibilities of the territory, organizing a company for the manufacture of the product, renting property to be used for that purpose in Los Angeles, and establishing sales agencies. It is further set forth in the first count that:

‘* * * this plaintiff was to have for a period of six months the exclusive right (in the contract territory) of sale and manufacture of a certain product commonly known as O-Ke-Doke, * * * that it was provided in the terms of the said oral agreement that during the continuance of the said agreement and after the commencement of business, the plaintiff was obligated to purchase of the defendant a minimum of 5000 pounds of cheese per month; that it was understood and agreed between the parties that the plaintiff was to pay to the defendant the sum of 36 cents per pound for the said cheese; that it was understood between the said parties that the said amount of cheese, upon being prepared, would make up 5000 cans of O-Ke-Doke which this plaintiff was to sell to the general public at a price of $1.00 per can; * * * and it was further provided by the said agreement that the said contract was to continue in effect for a period of six months and would be subject to renewal at the option of the plaintiff; * * *

Paragraph four of count three, also dismissed by the circuit judge, alleges defendant was indebted to plaintiff in the sum of $25,000 for money due from defendant to plaintiff on the oral agreement hereinbefore outlined.

Defendant's motion to dismiss this portion of the declaration was based upon the contention that the oral agreement claimed by plaintiff to have been entered into in the State of New York was for the sale of goods of a value of $100 and upwards and, there having been neither partial payment nor partial delivery of the goods or any note or memorandum thereof in writing signed by the party to be charged or his agent, the agreement was unenforceable both under the statute of frauds of this State (2 Comp.Laws 1929, § 9443, Stat.Ann. § 19.244) and like statutory provisions in the State of New York (Consolidated Laws of New York, Chap. 41, Personal Property Law, § 85). Further, that such sale was of goods of a value in excess of $500 and, therefore, was unenforceable because of similar statutory provisions in the State of California (Cal.Civil Code, § 1724). Also, that the alleged oral contract was one not to be performed within one year and, therefore, in violation of the statute of frauds of this State (3 Comp.Laws 1929, § 13417, Stat.Ann. 26.922) and of similar statutory provisions in New York (Consolidated Laws of New York, Chap. 41, Personal Property Law, § 31) and in California (Cal.Civil Code, § 1624). Because of the similarity of the relevant portions of the statutes of frauds in Michigan, New York and California, it is of no consequence in decision of this case which law governs.

Appellant asserts that the order of the circuit judge sustaining in part defendant's motion to dismiss was erroneous because the contract was in fact one by defendant for the employment of plaintiff in the nature of an agency, and therefore not within the statute of frauds. We think it is clear this position cannot be sustained. This contract provided for a purchase by plaintiff from defendant of merchandise very much in excess of the amount which rendered the contract unenforceable under the statute of frauds. The contract was wholly executory, and its interrelated provisions must stand or fall together. The noted provisions of the contract are not severable. If one is invalid the contract is unenforceable. Thorbahn v. Walkers Estate, 269 Mich. 586, 257 N.W. 892. Plaintiff is bound by the allegations in his declaration wherein it is stated ‘plaintiff was obligated to purchase of the defendant a minimum of 5,000 pounds of cheese per month’ at 36 cents per pound. This provision was clearly within the statute of frauds. The holding of the circuit judge that as a matter of law the alleged oral contract was unenforceable and therefore plaintiff could not recover for its breach must be sustained.

In arriving at the above conclusion we are mindful of plaintiff's contention that the alleged oral contract has been partially performed by plaintiff and, therefore, should be held valid. Here again plaintiff's position is not tenable because the declaration, fairly construed, discloses merely that plaintiff did some things which were preliminary to the performance or execution of the contract, not that he did them in performance of the contract. In the first count of the declaration plaintiff sets up that ‘he undertook to make proper preparations for the commencement of business; that as part of said preparations it was necessary that he incur large expenses in traveling * * *;’ and further in the same count he alleges ‘and before the commencement of business' defendant notifiedplaintiff that it would not carry out the terms of the alleged oral contract, ‘and instructed your plaintiff to discontinue any further efforts to commence business.’ Thus it appears from the declaration that the acts which plaintiff now attempts to assert were partial performance of the contract, were nothing more than activities preliminary to any performance or partial performance under the contract itself. What plaintiff did ‘before the commencement of business' contemplated by the alleged agreement constituted neither consideration in part for the alleged contract nor part performance thereof.

‘The payment required by the statute is the usual payment, as the term is commonly understood, whereby the vendee unconditionally transfers money or property to the vendor which the vendor unconditionally accepts in discharge, pro tanto, of the purchase price.’ Leonard v. Roth, 164 Mich. 646, 130 N.W. 208, 211.

In a recent case having a somewhat similar factual background Chief Justice Wiest, speaking for the court, said:

‘The action of plaintiff in giving up the practice of his profession was but an incident necessary on his part to place himself in a position to accept and perform the contract and not a price or consideration paid to defendant for the contract of employment.’ Adolph v. Cookware Co., 283 Mich. 561, 278 N.W. 687, 689.

See, also, Coleman v. St. Paul & T. Lum. Co., 110 Wash. 259, 188 P. 532;Hewson v. Peterman Mfg. Co., 76 Wash. 600, 136 P. 1158, 51 L.R.A.,N.S., 398, Ann.Cas.1915D, 346; Reynolds v. Scriber, 41 Or. 407, 69 P. 48. As noted above, the circuit judge was right in dismissing the declaration in so far as plaintiff sought to recover damages for the breach of an alleged oral contract, or to recover money claimed to be due from defendant to plaintiff under the alleged oral contract.

As to defendant's cross-appeal from the refusal of the circuit judge to dismiss count two of the declaration and the remaining portion of count three (so- called common counts), the following appears from the record. In the order made by the court upon defendant's motion to dismiss it is stated:

‘* * * counsel for the plaintiff having elected in open court and his written brief filed herein to treat count two of his said declaration as so amended as a count in tort for fraud and not in assumpsit upon contract, * * * and the court further having decided that count two of said declaration is in tort for fraud and not in assumpsit upon the contract therein alleged, * * * it is further ordered that, as to count two and the remaining...